40 Years of investing wisdom applied to today’s market

As the son of a Certified Financial Planner, I got an early start on investing. Even as young as 12 years old I would go to my father’s office to help him with clerical work to make a few extra bucks…but along the way I couldn’t help being curious about all those big books; Value Line, Standard and Poor’s tear sheets and the in-depth research reports from his firm, A.G. Edwards.

Sure you could say it was in the blood as I got hooked right away. In fact, my very first investment was a copper mining stock, Asarco, that went up 30% in 3 months.

That was pure luck. But it set me on course to keep investing and keep learning so that my results weren’t a matter of luck. Rather it was about understanding how to stack the odds in my favor to enjoy greater investment success.

On Wednesday May 1st I will be giving a full presentation on this topic with 9 lessons in all from my 40 year investing career. Then I will share how those lessons apply to today’s market to navigate a course to future outperformance.

Today, I want to give a preview of these insights by focusing on 3 of the lessons learned.

Lesson #1 = The Benefit of Value Investing

There are many different investment styles. Everything from day trading to buy and hold investing. Or a focus on fundamental vs. technical attributes. And then you have the ideas of value vs. growth vs. income vs. momentum approaches.

I have explored them all. And the one that makes the most sense to me is a focus on value. Meaning to find stocks that are trading at an ample discount to their fair value allowing an investor to enjoy outperformance as they rebound to their proper price. This is the approach favored by investing legends Benjamin Graham, and his famed mentee Warren Buffett.

However, value investing doesn’t mean the same thing to everyone. My twist is to avoid stocks with weak fundamentals like declining earnings. Too often they go from bad to worse. Instead you want a thriving company that has sold off allowing you to pick it up from the discount bin for 20-40% below fair market value. A portfolio of stocks with that spread will enjoy a marked advantage over other portfolios.

Lesson #7 = Growth and Value Are Not Opposites

Too many investors imagine that there is a singular spectrum for stocks with value on one end and growth on the other. That is rubbish!

They are separate concepts that blend incredibly well together. In fact, my two best investments of all time come from this camp.

Amazon @ $8.65 back in 2001 after the tech bubble burst

Priceline @ $14.62 also in 2001

And yes, I have owned those shares for a long, long time enjoying robust returns. There is simply no way that these stocks, that were originally in the value camp, could keep outpacing others unless they were also incredible growth companies.

Long story short, why settle for boring value stocks when you can enjoy exciting growth companies trading at discount prices?

Lesson #9 = Algos & HFTs Have Changed EVERYTHING!

We all know about the rise of computer based trading. Algos and High Frequency Traders dominate the investment landscape. Some firms have gained such an unfair advantage that they can go an entire year without having a single losing session.

Here is the sad truth: WE CAN’T BEAT THEM!

At least not at their own game. They simply have more money, experience, PhD mathematicians and technological firepower than we ever will. Thus, we need to carve out a different path. And that is to play the role of the counter puncher.

Like in boxing you aggressively respond to overreactions by your opponent. As it applies here, when the best growth stocks get beaten down by the computer traders…then you buy the stock on the cheap to enjoy outsized gains as they bounce back.

What are the Other 6 Lessons?

The answers will be on full display at the 5/1 free webinar where I go deeper on the topics above plus insights on these vital topics:

How to use economic data to understand market direction

Value investing pitfalls

The power of EER

Importance of timeliness

When to sell

And how to use all these lessons to beat the market now

Please join me for this webinar 40 years in the making. Spaces are limited, so register now by following the link below.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...